As a purchaser, do you push suppliers on price alone? OK, it is a fair tactic when so many sellers will give in, but does it lead to long-term gain? What other ways could you get a better deal for your organisation? Maybe extended credit terms or volume rebates?Whichever side you are on, what difference could 2% make to your company? Just to get another 2% on a selling price – and/or 2% less on your purchases? How much extra profit will this produce?
Developing your ability to negotiate more firmly and flexibly is not a contradiction in terms, it can be
foundation for increasing business success and also improving relationships. The simple definition of negotiation is: “To work or talk (with others) to achieve a transaction, settlement, an agreement. (from Latin negotiari – do business with)”
Typically, there are four options for outcome of a negotiation – and desired one is “win-win” unless you are just going for a one-off deal and you may want to opt for “I win – you lose” choice, although that is not really necessary!
We can all improve ourselves as negotiators by following a few simple steps and treating situations as more than just a bargaining joust. It will also help your cause if you consider situations as something to be resolved and not as a battle to be won! As with many things in life, key to success is in planning and preparation. This will impact your confidence, and behaviour, when with other party. The more prepared you are, greater chance of you achieving deal you want.
One of first things to consider in your planning stage is “the balance of power”. Imagine a set of scales – and list pressures or drivers each side faces:
I wonder what you find? Many similarities? When you recognise that both sides might be facing similar pressures you can take heart! Another way to use this is to assess what drivers other party is facing, and you can do to reduce ones on your side to increase “leverage” you have.
To help you with planning and handling negotiations you may find it useful to work through “AIMING HIGH” process.
AIMING HIGH
A ssess: Consider situation, balance of power, leverage. What is going to be needed for a win/win outcome. What is previous experience with this contact? How much do you need deal – how much do they need it? What might be barriers? What have you to offer that is unique?
I nterests: What are your needs, wants and desires? What are theirs? Think about their interests – put yourself in their shoes – what do they need – what are their drivers (business and personal)?
M ake time: Planning and preparation is key – create time for it. Do not be rushed – do not negotiate under (or “un”) prepared. Also, make time for actual meetings – time pressure can be a problem in a negotiation – party feeling under most pressure will often make biggest moves.
I nnovate: Remember, it is not just “their” problem – if a genuine negotiation is to take place it is a joint one! Think about – then rethink – “the pie” and how it can be shaped and cut. Look got different ways of approaching situation.
N eeds: What are their key needs – and wants – and objectives? What are yours? Check back that your ideas can satisfy these – for both parties.
G enerate options: Put your package together – consider all tradable items – those you want and those you can give. The more options better. Whether buyer or seller, think about package in terms of more than price.
